CathFoods will release a new range of candies which contain anti-oxidants. New equipment to manufacture the...
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CathFoods will release a new range of candies which contain anti-oxidants. New equipment to manufacture the candy will cost $3 million, which will be depreciated by straight-line depreciation over five years. In addition, there will be $5 million spent on promoting the new candy line. It is expected that the range of candies will bring in revenues of $5 million per year for five years with production and support costs of $1.5 million per year. If CathFood's marginal tax rate is 20%, what are the incremental earnings in the second year of this project? CathFoods will release a new range of candies which contain anti-oxidants. New equipment to manufacture the candy will cost $3 million, which will be depreciated by straight-line depreciation over five years. In addition, there will be $5 million spent on promoting the new candy line. It is expected that the range of candies will bring in revenues of $5 million per year for five years with production and support costs of $1.5 million per year. If CathFood's marginal tax rate is 20%, what are the incremental earnings in the second year of this project?
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To calculate the incremental earnings in the second year of the project we need to consider the reve... View the full answer
Related Book For
Management Accounting
ISBN: 9781760421144
7th Edition
Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton
Posted Date:
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